RXT - Earnings call transcript Q4 2020 | Rackspace Technology, Inc.

Due to licensing restrictions, you must log in to view earnings call transcripts.

Operator

Greetings and welcome to Rackspace Technology Fourth Quarter 2020 Earnings Conference Call. At this time, all participants are in a listen-only mode. A question-and-answer session will follow the formal presentation. [Operator Instructions] As a reminder, this conference is being recorded. I would now like to turn the conference over to your host, Joe Crivelli, Vice President of Investor Relations.

Joe Crivelli

everyone. afternoon, Good Technology's Rackspace XXXX conference earnings Welcome fourth call. to quarter are With and Chief Kevin Executive today Chief Officer; Officer. President our our Jones, me Maletira, and Financial Amar found will today deck website. refer slide Investor Relations we can The be on our to see On we make be certain on Slide that comments call this X, will you'll forward-looking. to subject risks would are uncertainties, statements which actual cause These and results to differ. risks and our in uncertainties SEC included these is of discussion A filings. law. except to update the presented as assumes required Technology call by no obligation Rackspace on information the

certain the measures our and Kevin. earnings in provide rules, I'll financial further accordance of to which your in includes tables respective to certain now presentation believe our Our both these SEC website. we these of non-GAAP take the their GAAP reconciliation included our and useful to available presentation, adjustments remarks, call and measures. we release provided with on measures, investors. our prepared a questions. turn most are which After measures are have today's slide directly to will Reconciliations information we In found over comparable

Kevin Jones

advantages welcoming we He official his topic, And please and how results made walk will open by are perspective on Amar quarter for through the results market competitive And giving thanks addressing in enabling Company questions. an with for multicloud before financial that some we I us. as start quarter impact and more perspective Officer joining in overview for detail. the will our are Technology concluding he to Financial share view of Chief additional fourth me quarter first discuss and has the I'll On earnings remarks make huge that to call financial a another result. Rackspace afternoon Maletira, on are Amar Good the operate his we the and massive to and and will well excited share excellent you as with the you. opportunity It President our we the success. was call. that join us the

you very Rackspace booking see positively we've we quarters it Slide topline. another As The sales recent discussed quarter is strong was seeing Revenue in are was addition, in third for And XXXX. the was quarter. $XXX on and XX% and success in to of last X, quarter impacting resulting compared growth can compared strong the leverage earnings Technology. profitability. and This million to year's fourth up X% quarter the

driven third revenue revenue and was net Excluding growth Revenue our was the XX% strong continued as legacy bookings past growth delivered at we've quarter. business, stronger OpenStack by even to compared in growth as core improvement the the year-over-year X% well year retention. over

quarter increased and bookings As $XXX third as is model, programs working, and slide, nearly is notes increase pleased XX% I'm our was takeaway the key this automation XX% this refinanced moment. XX% XXXX. is finding profit was But our more X% $X.XX, this on fourth share the driven investors significant Amar the per XXX% to maturity talk we well also retention as our growth. the installed moment. we customer year-over-year and as this up date. We class sequential. ways best now that by more our our in executed compared by for and business all senior there Company organization firing our cylinders the puts and by earnings debt The execution have is will our is land transformation third quarter. earnings was reduced to up outpacing and additional operating an the XX% term non-GAAP noted on to which rate well Amar maturities were refinancing our deliver no investment. and EBITDA net year-over-year expand the earnings Adjusted up debt This the the in follow million, business debt that details which revenue quarter. with I sequentially is in and to success for takes years. leverage And be $XXX with as new X% Non-GAAP revenue the million in savings scalable month growth on will about a pleased will base. up sales to and of quarter the core extending about seven interest materially year-over-year cash continue loan Technology to XXX% from Rackspace in significant XX% strategy provide earlier engine this until and in a sales

business spend change resources one to cloud customers past no Slide one whole Multicloud to Rackspace compute [indiscernible]. for their X. and longer for we and customers quickly help on moments the is investment a their few pick a just want up, Customers save years it build long a on platform while with Technology few other it. to believe operating on runway growth. picking shareholders has in some business money, why I down The discussing Turning exploded because continued or other scale some model. platform want scale diversify platform compelling

platform another. one on better run may versus applications Some

users for on move on applications the this according expensive complex. rules, the or So maybe cloud new But working The two provider private reasons side only constantly data more XX% and with new to pricing to legacy changing to privacy are Validating multicloud new offered. cloud slide, security cloud. the other or too is may left Gartner. cumbersome with is belong while service landscape or cloud of

largest IT need result, multicloud at companies sophisticated managing their environment. world's even most the the help organizations As a

Technology customers Rackspace forecasting and at for news a this is continue runway opportunity white investors using the slide by see XX% XXXX. $XXX managed Gartner are into you market gives will our middle of Great in that of entirely billion So multicloud is is to grow for multicloud of years growth. service. almost that continued space that

end-to-end infrastructure, a Rackspace small built companies, and safely including multicloud applications, data X, the shown product has security. of entire lines managed As design stack the advisory of as their and help where continually well We an across implementation environment. that all of services, we mid-market services portfolio optimize Slide these business, services the operate lifecycle business, enterprise navigate services including as to provide journey on Technology and

deliver these in across the private cloud provider other multicloud. We at industry hyperscale. have or this in no cloud capabilities who public breadth scale and We there depth services major of is believe capabilities the can all

world and of that the X. is filed transformation a in most and were worth Turning noting by the one they the customer It's company. staffing. At Slide certification of some in face thought across talent biggest professionals digital the with IT talent are challenges and we expertise access to extract technology at prefer the a today. able best frame to Technology, And globe. that large, to work Key Rackspace

Rackspace multicloud shown a and key to asset collective that as they that slide, the on the the depth So value of table by expertise Rackers represented talent Technology is for is customers. bring in XXXX and our our

side than the right to On professional automate. the all a it industry-leading hours that and our the of the from Slide leading hyperscalers impossible, time. that highly XXX components to have services. proprietary software and difficult, $X be and us many for XX if includes billion cloud not It our certifications Fabric sustainable X, gives skilled represents of advantage Rackspace pools recognition unique believe We more deliver million investment company. we would Fabric On note is public Rackspace over competitors you'll that cloud competitive in an software of underpins slide, replicate.

Here's why.

lot a same Over automate they decades we've the time workflow. path in use any to course over of cloud seen Rackers of times different two customers, that. business, And multiple code to the write a

machine that automated. can identify work We to also learning be used tools advanced

our a Services for in was Technology's automation are in Cloud Wave We Forrester Hosted solution that Slide of have North and XX, And we significant every that of continue in today recognized increased automated in for business. leading The our Wave Service industry Rackspace gains of figure knowledge Approximately optimize The based implement drive On in automation Forrester and Managed a in knowhow critical Providers. dramatically workloads efficiency as we continue mass XXXX. Private leader year. Multicloud XX% to our one accomplishment America XXXX being further to upon

that the in only leader was Forrester a identified You Technology both can as company Rackspace studies. see

In customers about XXX system the over companies Mrs. of To States. addition, Cloud sense needed frozen of to Mrs. the Infrastructure want T's We XX, help Magic in in a of ERP makes help, [horizontal migrate. an all year. to mentioned. T's, Quadrant Rackspace they axis] Services, million identified Managed strategy process completed Mrs. months, timelines pierogies we examples United On Rackspace manufacturer Technology a navigate is of also share I helping to leading shorter just pierogies of are any the journey moving their Google seven than part give as the the which some leader With for T's scale, having Slide the named Gartner were talk you strongest XXXX Public and and the a let's Technology's Professional cloud. the how to estimates. as very Worldwide. in Cloud complex

to IT Services, do of Migration director accelerate downtime Technology and functional minimal This from pane helped is that Managed on Rackspace Transformation, no capabilities a addition, by glass and great the whilst Rackspace IT was case partner transaction migration one In The Managed and up Application of Technology commenting their complex and sales forecasting study shop, everything. with migration Business a to a modernize Storage. XX% customer's Cloud, said, Services the a single disruption. solution processing one-stop including Public could

the AutoPets the AutoPets clients. and onboarding Finally enabled enhance experience a needed with in infrastructure, our solutions on and the last Rackspace SAP little In Slide Mrs. work Company is major space, week, things joint application speed an Internet by to On Google Technology. and Cloud XX, T's. modernize we certification of differentiation with potential our customer were step expertise reliability. improve awarded its robot for Google is This

help Technology, scale With at scale and help was today. XXX,XXX its today Onica of is the cloud the onset users multicloud business XXX up. from just AutoPets to Rackspace migrated is to team users One to from our reasons the the over companies quickly because relationship quickly able it growing of within

prospect as As of grew and wide AutoPets their own lowering our proud period utilize the things Development, this during Internet a it you Application revenue as I'm product work of increased did we Cloud AWS ultimately imagine, while for well reliability of Native solutions because costs. exponentially. solutions can

you open detail Q&A. will before take remarks in for will Amar we Now concluding our more Amar? make financial some through results and I

Amar Maletira

everyone Thank you, Kevin. for And thank joining today. you

the more than for initial industry and the multiple Before financials, incoming into have technology CFO. I've let share technology XX the cycle. getting seen some observation me and been business years in as I

IT the from and beginning is shift unprecedented. of well is in with And today However, to positioned Technology the truly benefit what multi-year at Rackspace are the cycle. experiencing we believe marketplace to digital a multicloud are trend. I massive secular of we workloads transformation just

We growing are and addressing market. an attractive

business. Platform good to compared year-over-year. pro quarter driven converted while XX% by Multicloud revenue success metrics for evidence are We history XXXX. today in revenue. efficiency announced outpaced financial revenue growth, up up core strategy, $XXX million, EPS three and was benefited Total is and the operating to up growth increased $XXX our of organization. the EPS quarter Fourth into execution non-GAAP have months earnings best and line core Slide the growth. repayment and strong ended the This fourth Company's get revenue quarter of last year a we and that as XX% cost XX% last million ongoing December from was Non-GAAP let programs. was details that lower momentum forma debt. XX%. last success XX% execution $XXX results. grew due an by our XX XX, continued Non-GAAP The year's XX% was said, right shows driven grew the This of our and me expense refinancing at transformation top and results we past bookings sales customer profit Apps Cross have overall and were interest revenue year the have With also increased XX% our This financial XX%. had fourth by the in by new and quarter Bookings over compared into revenue machine the fact. year. key from million to driven to in was grew second

and Apps led overall XX% actively were the financial market. and growth up to This year, to the for We in continued to manage levers as cash. On $X.X billion. to Platform. multicloud was billion, $X.XXX profitability in the XX% optimize Company broad-based both revenue and bookings a at in execution growth at well driven by Cross Slide sales as and the This in operating total largely multicloud XX, due growth full

Our forma reduced EPS core profit XXX%. at at X%. revenue core and non-GAAP These million grew $XXX XX% for year-over-year the operating driven transformation Non-GAAP full grew $X.XX growth, were XX% and and XX for was by The by up segment Apps Multicloud geography revenue and year-over-year. was program XX% revenue XX% Slide the X% revenue year pro cost by was XXXX year revenue in grew business and expense. provides grew interest XX% XXXX. of breakdown of segment Platform year-over-year. fiscal represented of and and Cross revenue up

market continues opportunities We to evolve. have multiple in as segment business this the

accelerate in next and selectively in will years. strategically expect new to We offerings segment the few and the invest

a are represented total was revenue not runway APJ EMEA grew billion and in and for are at X% the these marketing, in XX% year-over-year. which year underpenetrated and the XX% while Our represented have growth actively revenue XX%. grew Americas APJ for we OpenStack solid EMEA at of and we revenue in Geographically, $X full of of Cloud XXXX declined regions. two of We Public X% and grew year-over-year. revenue business, XX% X% believe revenue X% by

go-to-market regions, refined year, past have sales Ireland, Zealand, our for South snapshot We a quarter We our full year. metrics Slide XXXX. in the cash broaden Malaysia, Bahrain countries of the Egypt, Japan, UAE, and expanded these is New in flow as coming additional these presence drive strategy fourth results years. Southeast other we we efforts such leadership, Over expect global to two Asia. and in Africa, the our and our in coverage enhanced places XX entered our and the

quarter, sequentially. million. EBITDA year-over-year million, and was up $XX X% fourth the expenditures adjusted $XXX were X% Capital For

cash a you which do If million. free as define it's adjusted $XXX just flow less was the EBITDA math, we CapEx

intensity million, up to and full adjusted XXXX for capital was For Capital and cash full-year, $XXX X% the free expenditures in was EBITDA flow million. X% quarter the were $XXX year. was X% fourth million. compared the Adjusted $XXX

we and We to for undrawn and million investments the the year in XXXX We facility. due at be half with revolving to expect slightly are in of of and we ended business to in be X% the first intensity the cash $XXX equivalents capital should making of year. X% credit higher $XXX range the full million have

Slide to XX. Turning

was in Over our time functions margin the the two higher capital programs past market mid operating non-GAAP drive timeframe, to investments targeted which delivered we productivity margin trended efficiency have teens. ongoing At same years, up for reflects fourth our result market of making to optimize and expense This interest as further increased in income while the OpEx consistently we our high a to the SG&A across lower structure. coverage. higher net go-to been

trend. a expense shift Adjusted to rate. While amortization a gross margin growth continue we intensity we capital-light this lower margins model and adjusted where gross the to with and margins reflect like EBITDA to I and in on EBITDA depreciation are a would as are decline address capital topic, reflect

a First, to our provider. solution is in to phase the we And cloud infrastructure customers most journey, initial new as are are services. weighted of the the more spend compared of

expand and base a the investments are making we build install land strategy. part of as to our Second,

profit While dollar corporate on below consistently public cloud is our accretive return infrastructure a investment. carries high average, gross it margins delivers gross and

than U.S. metric improve phase sell a model the teens, should of fourth, the XX% to And this favorable our in minus operating most margin capture both, We operating life margin leverage. margins or shift best in time of see that and which approximately and make we gross to with Third, gross we installed growth profile solutions the best-in-class and secular base, is mid our over point the mid business during to to we plus is higher multicloud. or expect margin providers. this in gauge from and based line non-GAAP as better believe as high revenue operating trend margin a performance land growth mix we services of couple margins expand, be operating over

have capital significant savings expense Slide earnings outstanding the and next and our turning million generated will to call, XX This our Now have interest seven all debt now by structure. $XX interest million we annually. to for total, and completely $XX repayments last the our debt. maturities refinanced In years. debt total no Since we refinancing after reduce meaningful our IPO

Now before our We XX, four total revenue XXXX; for after primary I about IPO. immediately revenue for growth, guided provided adjusted recap talk to we and how want the fiscal year growth, a metrics I against EPS. Slide on guidance perform EBITDA non-GAAP core to expectations XXXX,

you these each of here, As can see for the forecast year for metric. the exceeded we

the the sales that Our we which programs Company cost the earnings growth, debt continued ongoing the outperformance was significant transformation and implemented and driven of on expense growth lower by refinancing. interest leverage multicloud market, our optimize to for transformation are and from this capitalize repayment programs

that with me year. for our our On XXXX. coming XX, you share let will Slide outlook as So backdrop, for the a outlook see

in half revenue billion. year, full an the in expect acceleration million growth growth implied investors the first assume of to year-over-year Core which to implied the forma growth an XX% profit growth of second year-over-year range is XX% $X.X X% midpoint, also at at of acceleration the this an midpoint. the XX% operating X% of $X.X from the pro XXXX. and from billion, $XXX of Non-GAAP in in revenue an of revenue billion range in growth midpoint X% fiscal at For XXXX. which $XXX is which This Also million, revenue the the $X.X is revenue XX% in fiscal of represents the is range the in $X.X can guided half pro XXXX. we fiscal forma billion to

of earnings or range Non-GAAP about that, Non-GAAP million seasonality. million. expect our million to historical line XX% average half for our With of tax at the the of We profit share expenses million will XX% and first with midpoint. back in be half Kevin? of fiscal Non-GAAP roughly at Kevin XX%. operating expect we $X.XX call turn the And XXX to in the or to second in $XXX XX% share XXXX, which per rate in growth non-GAAP $X.XX to weighted is remarks. of expected $XXX closing expense. to other shares I is income XXX of the per

Kevin Jones

Thanks Amar.

open for reiterate questions, we positioned estimated we is Before what why to Rackspace me by to billion multicloud extremely is let be a $XXX believe XXXX. opportunity capitalize market well Technology

XX, hottest mid-market business, business supply sector and to on small to multicloud company the to evaluating planet, Turning efficiency agility. enterprise their and Every arguably is is big the drive today. technology and the a Slide best improve multicloud in

multicloud data, storage changing of moving migrating difficulty]. is that on Secondly with and bulletproof complex. need in a infrastructure on needs legacy security, managing IT department simply daily. of a best ensuring that data to new department effectively literally is which them. which not platform, top a all is IT of There consider staying factors It multi-cloud works app landscape help incredibly to [technical the environment are deciding provider myriad

So of Rackspace the we extremely positioned partner to choice. Technology is be well believe,

ensure for important we all are known are customers services the and and fanatical journey, sizes XXXX the we leading multicloud of customer to wrap all our and play experience company. an expertise point was of help their the automation, the proof earnings have We and the and of pure profit optimize partners solutions multicloud We and non-GAAP earnings by sheet stage booking core of yield and financial operating shareholder flexibility restructured We per incremental XXX%. set proposition. growth, balance our we years revenue enhancement XX%, grew growth revenue value. for share value to XX%, XX%, non-GAAP

I beginning am at with where very the So Technology pleased Rackspace XXXX. stands of

take come. great With We years questions. in deliver our that, to Operator, shareholders we your for ahead. will expect the please to go results

Operator

from comes Perlin [Operator first question Dan Instructions] RBC. And with our

Dan Perlin

million. going were I to million was expecting. from terms year. could it of investments know the we implicit margins $XXX in of year-on-year. talked explicitly embedded perspective, assumptions operating just remarks a actually place just prepared little cadence It bit well has wanted little I to think of a It of But bit about as also the guidance throughout light the circle of to as you've are margin what's what you non-GAAP little gross walk kind in kind that in shift? we but bit the maybe like this back us shift And about $XXX the take declining your to profit are through as Amar, of those both that

Amar Maletira

look So me thanks, on let way at that Dan. with saying absolutely, the when of guidance, we so our our are start revenue And you just ahead plan side.

healthy growth, very And XX% is we fiscal a side, investments growing a to within that are saw and from on in XX%. forma making guiding are And operating X% pro that X% the for which and guide, We XXXX. at we at growth acceleration growth. EPS we profit are profit

have a So us. of multicloud is shift There front are for happening here, we haul. a in we just and running long clear the business this be huge opportunity tectonic to in

are growth making we So investments. certain

give point this touch that here. is we topic you Dan, growth because some investments let to an Now but me make will just of important are on the configurations shortly, this of here trying I

the when quite including investments you our about operations, broad-based the business, in tip which professional the think sphere. growth is team, services it's So go-to-market our of

will we shortly. that touch on of also to are these I weighted service XXXX. the and offerings half of more new first some launching be investments expect towards We And

well as on which the Now me of gross two profit operating additional color some let the profit. will areas margins topic investments your you touch on and gross as about give

areas and expand services in one the offering two is second in and land our new and solutions strategy. is are, So our

company. we the at core, Dan are technology a So

delivered So these well services the clearly will in making a we multicloud way in innovative redefine investments environment. as are as services are that consumed offered,

Cloud company engineering. products of the in on multicloud they us, By of it. the tested in cloud services public new. the with new love of we we half services be starting in front managed market-leading it's will These so tap launching we opportunity XXXX, all and in the Block the addressing first have about where huge will that exciting our we most Public it way, be Service have in year X.X history this with using Managed are elastic new redefining customers, this offering with services the So

are our single-tenancy. way We we cloud again delivered generation is will our more hybrid offer strategy benefit reimagining a with offering, multi-tenancy moving towards in the the gets and with to line totally immensely as private capital-light, next which of more capital-light offerings. This customers

We in the up are in cloud offerings also moving stack the native with - applications.

For example, to their customers our serverless applications, help effectively cloud. refactor applications to on work develop

new have three also will services excited I've about the XXXX. look so, IoT, months, but when at in in we roadmap security I here been fiscal services very solutions and for data only also Additionally, offerings is accomplished only profit has be, buck of going, terms to in growth, in not the where skating team fact pools, making. chasing okay. the and We'll the are but the the we investments what revenue

not what's it, one into nitty-gritty is investments into will of that So plan. get I and the the broad based, is of that our baked but part that's

is strategy. investment land second is and making in our we expand The are

to are journey new we of of are initial land. phase spend my in also go-to-market, investments is in margins and in When I in start-up as customer explained more weighted form it this new their infrastructure of most remark, compared prepared the lower these cloud we customers services. to Now the land a our gross the is that but

investments new up-selling so making We can are multiple and over these services. expand in accounts, also we margin by cross-selling years landing higher relationships

should model. margins operating operating mix and the well as revenue to due it So this favorable in and gross margins should give upwards both drive leverage as

every exhibit been new give of to $XX to industry expanding spend you points, recent term. three spend of of for me infrastructure. will we new from in of you of in in the that margins the this the longer for signed $X margin our of let for have to engagement. additional data When customers you analysts higher And year public you incremental the guys sale, very the are at important that XXXX also dollar And within you cloud quarter. nearly average shared on customers the bought life with very at our look we how services dynamic. Most for So we which we of look understand that estimate talking when, follow-on data customers over infrastructure will cloud guys the every first ports customers XXXX the last $X customers an XXXX, be offerings

was You of CAGR each a double-digit cohorts. basis on growth will a see there these in healthy

that and bookings, data all these seeing this we have in it not our after have points clearly margin higher So with in expand suggests expand but and that trajectory mix base. you're of we customers only landing new also growth our business our installed the

to you going a gross and we plan and why see execute margins. aggressively always guidance, look that's conservatively take at when you the So the

margins the couple gross or in of the points. assuming plus mid are be a XXs We to minus

our with very we This high best-in-class expecting are position mid the a teens. in providers the We in U.S. about here. And good margins is to line be operating feel to in service

So choice choice Dan. - the the we - have are investments to are capture we points these secular the And the the is choice wave. making

Dan Perlin

that's and you. to then of maybe looks kind then how as inside churn, really that. client about follow-up you the wondering the I'm like No, in quick that's number. what progressing can I of bookings inside as kind fantastic little And today? pertains bit also mix - legacy ask successful color, pipeline I just the guys. really bookings one quarter, you it Thank around, talk you the quarter for another appreciate a If could of sit here other

Kevin Jones

and very about how Amar, jump Very then your good, retention a and on thanks you in for kickoff much as Dan, Hey, churn well. bookings and the revenue questions.

bookings again, we're look, growth. once second best quarter company's history very yes fourth XX% million, and of quarter $XXX with in the So our sales pleased bookings year-over-year

So we're pleased with that.

Just to give the over color, we deals you closed in bit of X,XXX had a quarter. little

all bookings. in again broad-based were And across diversity once lots of So regions. our bookings

up we're up in were XX% up year-over-year. year-over-year. Japan, were For Asia-Pacific bookings. example, sales we in the In Americas, in Then year-over-year XXX% and bookings actually actually our sales XX% EMEA,

of growth multicloud at countries. terrific acceleration as different different So, rates to in all the continues world over accelerate

the mid-market segment performance, customer the if growth lot business a regional we kind in make customer penetrating very of market. pleased with traction So based. the broad where we continue customer and to of enterprise Good segments, look segment, across enterprise small segment again

The other larger in we increase saw Dan, year-over-year deals, thing, substantial right.

excited So pipeline. in that, our of about terms we're sales

so also the that, pipeline sales is despite asked going sales increase, continuing sales put great continues to pipeline up. numbers, about You had to up

time As is capitalize invest really opportunity. this great our Amar to take - indicated, this on and

your pipeline XXX% fourth the pipeline, that's and revenue very up thing Amar, point you year-over-year, component net sales mention. last bookings, of maybe want you'd So X-X-X revenue really But here but quarter growth retention touch sequentially there. mentioned view churn the on so might figure pleased good And on retention, one that in and to our churn a was we well. I'll net sales XX% then and report is as for one

the first revenue core probably net revenue net in revenue at exited stepped in you XX% really retention out the and quarter year at Our started quarter that We retention. XXXX. retention, remember as each was we net up XXXX XXX%

other color delighted we any expect that Amar, there. movement want to with provide? So continued and you

Amar Maletira

Yes here I think, quick comment one if may. I just Kevin

like more both reported a but XX%, on press in to make even clear in new as it's approximately the forma growth total signed quick as know somewhere the both basis. probably I'd to for release, that. I for we the XX% growth just on a bookings the - on had on basis logo. the basis on I is we forma I to well year, XX% make QX, pro So well states as basis. sure bookings it and alluded we a as One reported pro XXX point want

expand. don't our have you we And capture data cycle wave. So good this to I in this very early about color I we just the of many multi-year as sales continue that we on think at you our is you are at if beginning our so And and suggest - of ahead very mentioned, and just and land, us. innings new opportunity to motion. the opportunity is land a this feel logo points don't the and strategy I And expand some gave

not launching to offerings only in the to So lot going to mentioned I earlier. we puck of going there investments perspective, is but skate the from bookings as make are new excitement where that

Operator

next our And of Evercore. question Amit Daryanani is from

Amit Daryanani

duration Thanks one, that accelerating maybe momentum so far. we've And for just versus bookings call on 'XX, you about on just us booking drive maybe up first understand had anything you growth Kevin, taking my well. guess, the this I two help on to Dan rate talking there bookings, when say? of as see helping run I what follow-up eventually is do sales a or was let's 'XX question. have in

Kevin Jones

look, yes, great question. Amit,

bookings success be to pleased seen also, the that And is with continue we've success revenue We growth. had. that booking translating as you've into

really see duration, with pleased we continue we're the duration our - To to of in in customers. So the relationships diversity lengthening point, with to terms of your pleased with that good success bookings. of come

other of as a bit actually really in XX% revenue. earlier, more to million large exciting of specific, little our large more increase a having deals and signing thing recurring give that deals. in increase alluded I large to year-on-year deals you we a we define little than just The is $X had bit annual

of that enterprise continues to market accelerate. proof the penetration just it's this So

that deal logos excited to about far the strong, So duration of spot. of company sweet we've strong, record, by the really We're And book. really been size mentioned, a in size new Amar new that able right. XXX that our logos

optimistic. thing, be very feeling And Amit, that we deals selective right can we're about is the very the doing. So other

doing strategy we sure our it. and with line find want as that customer we're we up segmentation make deals to So

market, terrific momentum. to continues just So gain

Amar Maletira

period - just great to voice. if our captures and was me existing let customer services that's to all, and business I your just sell new in acquisition a add So new is only customers. net your we maybe, I If a of the and growth I also that part may first Well, think question. to indicator bookings of that through Amit may, revenue leading the all directed bookings and hear new to

project it in run the quarters and additionally, and annualized generally a bookings fully rate. the to bookings are for number run to three for revenue materialize takes So

our XXXX. will If growth fiscal guidance, see bookings driving at our you growth in you XXXX, revenue look in fiscal the

growth XXXX I midpoint a of fiscal XXXX. is accelerating core the guidance from X% our growth of at for fiscal revenue to As mentioned, in XX% our

by So we've that saying, summarize of let last a as success me we the in the are couple revenue growth bookings seeing our quarters. result of seen sales

Amit Daryanani

hearing your as again Fair enough. well. voice And nice Amar,

And as maybe about improve you operating wondering do you Rackspace could you I the current your that business, follow-up if flow disposal we this little have go free think with generation So we fair on if was maybe levers talked a forward? talk the how the you. cash at leverage bit to really about and could I bit for

Amar Maletira

statement. Yes, in during And focused my I'm and cash talked and at metrics I'm for we about focused day, metrics, is we is free cash number have and the my our good asking that what I lands look adjusted flow the flow cash that one flow Amit. End operations of from report. look flow a cash adjusted on cash that's from other perspective. The is I what a great to at clear, options cash both. in reported very as also is on bank, we one - the the be two thanks just which flow is flow think performance to No, remarks question about question, - one prepared

give billing in in lose quarter in on invoices went Two, we one-time fanatical control we in Onica some additional sure in a onboarded. and QX, that. don't Now experience system was our we for making as with integrated Onica's very, prepayment license software there, cash down there color One a and major related let QX customer is were you fiscal from happening. the flow large things account fourth to operations we that three was reported that a me is differentiate all live customer very the we are and did checks customers careful the that a quality customer mind keeping

this collection collected and receivables The invoices. we those cash So as we up to was general. pushed have in January delayed all

our plan is The we growing. and to sequentially our good third capital notice receivable in addition, revenues is is you in have working balance improve been growing. problem our receivable account because the our is can to one but place And a This opportunities have have, good account sheet, Amit, growing from metrics.

all Our seven-point for program at if that month have cash flow that be but you out and by something launched look that. always optimizing said, revenue is control items, our and already, profitability that's one-time usually three, operations With I growing been have that cash these for would from watch this solid.

not really worried about I'm by generation this So cash Company.

improve opportunities I lot think cash our we do flow. to have a of

and you flow - for can on XXXX as focused basis XXXX. have CFO, improvement that midpoint you sure at be flow I'll cash XX% One, fiscal forecasting have XXXX. will improving in net levers several non-GAAP a the income cash a help So in very the our which be we on we in growth are

Second, capital. we will tightly manage our working

I As across implemented to that is and plan seven-point do mentioned, I've the company.

interest reduced has cash a refinancing our repayment expense. Third, and debt

XXXX. that repeat. cash a And be expenses finally, also to IPO, won't fiscal our tailwind for had will some one-time that So we related

be XXXX grow expect and cash reported indicator it earning. I of and growth, So of optimization, operations be and profit good optimization that's focused earnings a maximization in cash will our quality flow on, I'll quality superior a should a and what from revenue

Operator

And our next question is from Ramsey El-Assal with Barclays.

Ramsey El-Assal

about maybe years. the the over comment Platform taking better of to contract. presumably ask due on Apps revenues few quarter. Cross That's sort leverage the kind of and of quite for It over anniversary what to wanted underlying is much so - exited timing of you of the sort organic question. Texas trying quarter I that get that of about normalized growth State strong a I'm acceleration the accelerating once largely year just about segment thanks my Hi, maybe the in And to comment sense and the Amar's & levered specifically acceleration. next rate that contract?

Amar Maletira

take will jump I you'd So to question. like later. in that Kevin, if

too up a and multicloud the move a me just Cross because think up we environment business I look it's are trying you critical that's Platform, our to move let portfolio at with the So customers good stack. very question are our - in stack our our also asking part us Apps though. of to & When

So we to at what be you growth in guiding, XXXX, kind in should right, and low XXXX least fiscal accelerating it in based high of should first the on in we of are expect double-digit what single-digit half. fiscal some

particular day, early, the one. - greenfield. is is is question At this at your Now market an important end the of very it

private our We're and environment. that cloud this we - want their there refactoring as as lot move flawless environment native into or cloud we are previous of tail. - us - long where customers out getting find They applications multicloud a we applications to in And want focusing more application companies who just us don't on-prem believe from of do and mentioned those started. we'll app at that's scale. You investments development remark, write on customers has is from a I a to have be their this

are looking the performance do their start customers they on they can that also they so their improve at of Our applications environment. just think a moving and application how workload to the refactor will multicloud I multi-cloud

providers, at service us if focused opportunity don't look of where for of of this lot lot no here, a think at have I claim they scale opportunities. work the an that can So we be it and you on. universe and is think this will I one is

start tuned. the So in should is This very of We couple stay that opportunities to expect for growing years a double-digit. exciting next us.

Kevin Jones

team. we're a is created for Ramsey, got see generation innovated this basket. well say, would We that's next the think said. economic I value where of we being And I And, great really customers. product just I think is

and We security. into work visibility customers input solutions, and being will about spending, got doing application the native of all we're initiatives Internet lots more stack of talking our and development, be more that up IT thing moving some cloud where strategic around we've the data

early here, area really our us. greenfield focused opportunity, very So of been days for huge has

Ramsey El-Assal

to ask that's just and And you helpful. allocation wanted about sheet, M&A Great, also specifically balance pipeline. capital

about we M&A of nice Now click, a strategic sheet think balance forward, you're that your how in M&A? in at maturities, paying your should down got you going debt guys debt order terms

Kevin Jones

that Yes, one. I start off with I'll will take M&A.

Amar Maletira

back with you I'll the - the go Yes, the M&A take one capital and allocation. with come I'll

Kevin Jones

Capital allocation, yes.

done been revolutionized question. of has the five since acquisitions look, important LBO really offerings. that our XXXX. our great very a have in M&A strategy So We've part service

Onica. acquisitions the strategy, capabilities. product advisory And at teams us We've of I've right. is the Onica, expanded Europe. at a and enhancing which architect Microsoft got Skies, and from some Azure It's capabilities in terrific spectacular, last our engineers, we've reach, very AWS M&A go-to-market amazing So up one growth, us year two then Rackspace end our And that been here moved the been done focused consulting been Bright capabilities did has gave enhanced was since latest on stack. we acquisition, the which

of really and now great So, got good, excellence platform. integration is center what got, integration we've playbook, which a this we've

that we acquisitions, we've paid realize the a companies. So and playbook good synergies system, good value really got for we do more management as we and sure really right make the that these

meant. capital we we multicloud We'll as talk our about deals. part of size last capabilities, will important do them of do to about geographic which service M&A, deals structure. be and thoughtful continue particularly a minute, Amar the forward. will But very do we to couple our enhance will prospects, presence, So our as allocation the we going growth the years look deleverage, transformation And in offerings develop our over that we of

Amar Maletira

the Let touch me allocation capital priorities. just on

in and explain - growth that areas we comment. investments my foremost, to make we even will in and did organic secular first So the of previous I

company we not that we sure is in operations, an a best continuously the across before across we making sure but of in shoring, investment second this huge operating G&A location. done as cost previous company example. And that's function as resources And my and I've efficiency our making in mix right leverage. the programs The that's that in automation, right are are making also drive just

to lot of those we'll centers data model. will into it we is, to back the that business. continue reinvested a - consolidate to bottom third line And the all as will employed we will The capital-light deliver that and things more move we

That's is third earlier focus the cash. my balance comment our why The is sheet. and on question deleveraging debt Amit's repayment on

from debt investments The buyback. offset will attracted opportunistically. targeted cash, then to very shares compensation that try an start alluded that paying to down Kevin We and we as is inorganic generate we when fourth stock-based is feel just opportunistically will dilution also to. finally, buyback And we the so that can

So that's for our company. capital priorities allocation the

Operator

And with Suisse. our next question is Cabral Credit from Matt

Matt Cabral

thanks, And earlier Amar, all gross commentary on of on detail margin. wanted for the thank the Yes, I on you. I investment. some to follow-up guess

different two about vectors, You expand and that land so talked services of new and model. and solution more

period XXs about back we how of in longer-term should that a Just initiatives? think the think should across pass you think margin, the outlook mid years and about payback company? range, the for gross we we about those do broadly, wondering how wondering And the two just talked to then sort about I the being duration more guess, quarters,

Amar Maletira

- Matt. question, so Yes, great

position we that talk time. and And will where finalizing So, of I'm let Again with me the to provide am month today. basically I'm and the we’ll Joe September you that at just three on I outlook we us not have a I looking an give will long-term that long-term Day. sometime and guys to I start job. in are Analyst launch outlook in opportunity in point long-term some a ahead only and outlook. first at exciting the can you

I right that the Now think, in terms we of gross make end of of the kind investments. how want the the to make we sure gross margins, day, margin

have our So as sign is strong. expand. that the have we up opportunity to we be perspective. option way, for And will We is will comes demand any want go and accounts selective selective that as strong, we be deal to Kevin we from the to an where demand mentioned, an land not and

stages margins, mindful gross ahead the making investments that early deals be get sure very make. So investments the we're we these will making in we of in time we on and the that

said, next or that's believe point year always can't and will do this And again, minus conservatively XXXX, fiscal better. a XX% But same in and I we aggressively. want plus year maybe or the But two mid Matt, planning I opportunity don't lose say particular know we do the maybe I definitely as are at for plan not at So, what will go time, invest. the this. this I execute for or be to that to in for. we time

the I the the to point we are think of that's continue make we because beginning here at cycle.

this into or back four us this to to hard cycle. wait after play. five for years If you the I've miss cycle into and six five companies And miss back for or then next seen years, get the it's get cycle,

we right are now. I well very think positioned

operating on where we an is, analysts perspective. is saying, And be what should I'm in margin an margins our and will you as investors and to while we et drive So SG&A focused in will efficiency, go-to-market, mid Matt? to making sales investments continue how high productivity and that's as where from in cetera. help, Does be operating teens that do do the we

Matt Cabral

guess actually pretty going should biggest far? program. have we about are so in it anyways. of think leads put you you more I sort company. about trajectory little a margin could of well you follow-up of to the It effort of transformation here? talk Just does expansion you've the expand to a was - and it made just takeout is like cost bit OpEx wondering how, seen the the where lot OpEx from the the going bit forward looks little and guys the a if you efforts about And in by OpEx the more I want ask driven the you I under for

Amar Maletira

think OpEx think it, everybody about growth the do the OpEx to grow OpEx to as reduction. you I When okay. a listen, you percentage dollar the should So want what’s and lower way are about think encourage growing OpEx, about revenue. I organization, We top-line, to the and don't of a think as is in

as or I - about at XX% landed XXXX. was fiscal about that you percentage fiscal expect XXXX, to in So in if roughly we our it XX% a QX, think In OpEx of about XX% roughly revenue. continue and

across efficiencies growth? are G&A. driving are we We the where seeing Now

we I best shoring. so touched the speak, just in terms surface G&A, As have to of in said

importantly, I've you terms We the same automation. rate. led previous surface can so we to the of where you scale that in programs use at the have to you of the don't more OpEx labor take the of But touched company revenue, scale processes, when have out in bots some process. automate

So in customers. help does that that respect, we company a automation are to

so in can automation drive that higher help with we Now can ourselves we efficiency internally SG&A.

not of focused There's you only be said reinvesting terms opportunity that. So back expect profitably. business grow driving three, should a lot it in see can of here. runway the terms that of on I into to we a think but I've us so And I as huge won efficiency, I

Kevin Jones

early them. as new soon - additional lower still supply will cost we They Yes, well there; very that huge add services really many really I profitability on we sign add opportunities But so additional well. that and usually more - And logos, mentioned I shoring, signed these We chain that's as signed are margins we've management. just are think best as good Matt. positive. we opportunity; on then as said, our workloads new the add drive would and the I side. would days logos And automation, as

all we where that it's are lifecycle these customers So the are. of kind with in we new

we got margin good opportunity. really we've expansion So, believe

Amar Maletira

because will higher do of if have Yes in we is, space and year. consolidated Most go-to-market some force is can two we office investments made continue add, I just productivity so of to the more last sales Number driving the productive. we sales Matt, we are becoming that.

We are also consolidating legal entities.

this from perspective. a go we there perspective. and are very bank has done that down opportunities of But after from shutting job are can that accounts lot We a company G&A good

let have this I funnel it me a way, put - So Matt.

cost convert leader, our how then and opportunities have fill to reinvest funnel some back of sales that it business. and how like funnel, funnel I to side to into closing, I of a at as the on the Just look how that

Operator

Crivelli we And for question-and-answer the closing to remarks. Ladies like reached would Joe the I and gentlemen, back of to turn session. call have over end the

Joe Crivelli

didn't joining have queue. We'll circle to to everybody the us those this with get back thanks if today. sure later evening. be you for any And in you we Well, Apologies to great would questions or a forward take speak you follow-up us, to to other and we your ir@rackspace.com. to at time evening a me give talking soon. like Have shout with to look

Operator

tonight's concludes This you. conference. Thank

lines a your disconnect and Again, for have you evening. your You thank may great this time. at participation

Rackspace Technology (RXT) 19 Feb 212020 Q4 Earnings call transcript